Last checked at 19 Aug 2015 07:00
INGENIOUS ENTERTAINMENT VCT 1 PLC
19 August 2015
Half-yearly results for the six months to 30 June 2015
INTERIM MANAGEMENT REPORT
We are delighted to present the half-yearly financial report of Ingenious Entertainment VCT 1 plc (the Company) covering the six months ended 30 June 2015 (the Reporting Period).
Overview of Activities
In December 2014, the Company cancelled all of its C shares and completed the full distribution of capital in relation to those shares in January 2015.
The Company has now completed its investment strategy and is fully invested under VCT regulations for its D, E, F and G share classes. The Manager will now focus upon maximising the returns from the investments made from those share classes.
The Company continues to actively source and review investment opportunities for the H share class. No further investments were made during the Reporting Period, although the Company has agreed principal terms on three commercial opportunities which it is looking to close in the third quarter of 2015.
During the Reporting Period two live events were undertaken by two of the Company’s investee companies. Liverpool Sound City took place from 22 to 24 May 2015 with a new ‘Festival style’ format that took place in the docklands area of Liverpool.
Field Day 2015 was staged on 7 and 8 June and once again delivered both increased attendances and increased profits. In June 2015, the Company accepted an offer to acquire its 15% stake in Waxarch Limited (the investee company that stages Field Day). The purchase price agreed is at a six times multiple of the event’s 2015 profits with the deal scheduled to complete in September 2015. The capital growth over the life of the investment equates to an unaudited six pence per share uplift for the D share class (an unaudited three pence per share uplift since the previous valuation as at 31 December 2014) and an unaudited three pence per share uplift for each of the E and F share classes (an unaudited one pence per share uplift since the previous valuation as at 31 December 2014).
The D Share class reached its five year anniversary on 30 July 2015 and the intention is to distribute any funds remaining in this share class shortly.
Results
The C shares, D shares, E shares, F shares, G shares and H shares are all accounted for as separate pools of funds necessitating separate reporting.
The C shares did not trade during the Reporting Period and, therefore, had no profit or loss to report (31 December 2014: loss of £47,000; 30 June 2014: loss of £35,000). The D shares made a loss of £14,000 (31 December 2014: loss of £13,000; 30 June 2014: loss of £87,000). The E shares made a profit of £7,000 (31 December 2014: profit of £7,000; 30 June 2014: loss of £29,000). The F shares made a loss of £Nil (31 December 2014: loss of £6,000; 30 June 2014: loss of £18,000). The G shares made a loss of £44,000 (31 December 2014: loss of £69,000; 30 June 2014: loss of £31,000). The H shares made a loss of £6,000 (31 December 2014: loss of £16,000; 30 June 2014: loss of £7,000).
The unaudited net asset value per C share at 30 June 2015 was £Nil pence (31 December 2014: £Nil; 30 June 2014: 39.5). On 17 December 2014 the High Court of Justice of England and Wales made an order sanctioning the resolutions passed by the Company in general and class meetings held on 27 November 2014 by which the Company’s shareholders approved the reduction of the Company’s share capital by the cancellation and extinguishment of all of its C shares. Up to 31 December 2014, the Company returned 78.0729 pence to investors, with the final distribution of 1 pence per C share paid to investors on 14 January 2015.
The unaudited net asset value per D share is 44.1 pence (31 December 2014: 64.3 pence; 30 June 2014: 63.2 pence) although this is after the deduction of an interim dividend of 20.0 pence per share in the Reporting Period and the deduction of a total of 20.0 pence per share in previous periods. The net asset value including distributions to date is therefore 84.1 pence per share (31 December 2014: 84.3 pence per share; 30 June 2014: 83.2 pence per share).
The unaudited net asset value per E share is 67.4 pence (31 December 2014: 72.2 pence; 30 June 2014: 70.9 pence) although this is after the deduction of an interim dividend of 5.0 pence per share in the Reporting Period and the deduction of a total of 15.0 pence per share in previous periods. The net asset value including distributions to date is therefore 87.4 pence per share (31 December 2014: 87.2 pence per share; 30 June 2014: 85.9 pence per share).
The unaudited net asset value per F share is 69.7 pence (31 December 2014: 74.7 pence; 30 June 2014: 73.9 pence) although this is after the deduction of an interim dividend of 5.0 pence per share in the Reporting Period and the deduction of a total of 15.0 pence per share in previous periods. The net asset value including distributions to date is therefore 89.7 pence per share (31 December 2014: 89.7 pence per share; 30 June 2014: 88.9 pence per share).
The unaudited net asset value per G share is 73.4 pence (31 December 2014: 79.7 pence; 30 June 2014: 80.8 pence) although this is after the deduction of an interim dividend of 5.0 pence per share in the Reporting Period and the deduction of a total of 10.0 pence per share in previous periods. The net asset value including distributions to date is therefore 88.4 pence per share (31 December 2014; 89.7 pence per share; 30 June 2014: 90.8 pence per share).
The unaudited net asset value per H share is 82.7 pence (31 December 2014: 87.9 pence; 30 June 2014: 88.2 pence) although this is after the deduction of an interim dividend of 5.0 pence per share in the Reporting Period and the deduction of a total of 5.0 pence per share in previous periods.. The net asset value including distributions to date is therefore 92.7 pence per share (31 December 2014; 92.9 pence per share; 30 June 2014: 93.2 pence per share).
Investment Objective
The Company’s main objective is to invest in companies established to create and bring to market live events and premium entertainment content which will provide shareholders with an attractive return. This strategy will aim to maximise the opportunities for paying tax-free dividends to shareholders from both the actual income received and capital profits on the sale of investments in the companies that the Company and Ingenious Entertainment VCT 2 plc (together the Ingenious Entertainment VCT’s) invest in (Investee Companies).
The current investment portfolio includes:
Festivals
Liverpool Sound City Limited
Ingenious Entertainment VCT 1 investment amount: £600,000 (D share)
(£1,200,000 across the Ingenious Entertainment VCTs)
The 2015 event was held between 22 and 24 May. The new style ‘Music Festival’ based event proved popular with its audience. Headliners included The Flaming Lips and Belle and Sebastian, and the event delivered a profit for the investee company.
Field Day Festival
Ingenious Entertainment VCT 1 investment amount: £1,000,000 (D share)
Ingenious Entertainment VCT 1 investment Amount: £500,000 (E Share £320,000 and F Share £180,000)
(£3,000,000 across the Ingenious Entertainment VCTs)
The ninth Field Day Festival was held on 7 and 8 June 2015. The Saturday sold out a week in advance of the staging event, having reached its 40,000 licenced capacity and the Sunday sold 16,000 tickets. The performance on Saturday saw the event deliver an increase in profits and, with capacity to grow Sunday significantly, the event is now well established with further potential growth still achievable. Saturday headliners included Caribou and FKA Twiggs with Sunday being fronted by Ride and Patti Smith.
Love Supreme Jazz Festival
Ingenious Entertainment VCT 1 investment amount: £375,000 (D share)
Ingenious Entertainment VCT 1 investment amount: £750,000 (E share £445,000 and F share £305,000)
(£2,250,000 across the Ingenious Entertainment VCTs)
The third Love Supreme Jazz Festival took place from 3 to 5 July 2015. Headliners included Van Morrison, Chaka Khan and Lisa Stansfield and the event took another step forward with paying attendances in the region of 9,000 per day.
The Festival is promoted by a company in which the Ingenious Entertainment VCTs, Jazz FM and Neapolitan Music invested and, with the 2015 event making a £150,000 profit for the investee company, the brand looks well positioned for further growth in future years.
Outlook
As the economy continues to slowly recover and discretionary spend increases, the Manager would hope that live event attendances at least hold firm. What is becoming evident is that the so-called ‘headliner driven’ event are showing signs of customer fatigue and the events that deliver more of a broad ranging customer experience are benefitting from this scenario. The Manager believes that it has created a portfolio that very much delivers this enhanced customer experience.
The Manager’s focus remains very firmly upon ensuring that each new investment made by the Company is carefully sourced and structured in order to balance potential upside against capital risk. The Manager also believes that the Company’s strategy, which aims to balance equity risk with a significant level of downside protection through minimum revenue arrangements in respect of each investment, remains entirely relevant in an economic environment where recovery remains sluggish.
Ingenious Ventures18 August 2015
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)for the six months ended 30 June 2015
| Six months ended30 June 2015(unaudited) | Six months ended30 June 2014(unaudited) | Year ended31 December 2014(audited) | ||||||||||||||||||||||||
| Revenue | Capital | Total | Revenue | Capital | Total | Revenue | Capital | Total | ||||||||||||||||||
| Note | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||||||||||||||||
| Gain on disposal ofinvestments | - | 60 | 60 | - | 46 | 46 | - | 64 | 64 | |||||||||||||||||
| (Decrease)/increase infair value of investmentsheld | - | (2) | (2) | - | (124) | (124) | - | 28 | 28 | |||||||||||||||||
| Investment income | 79 | - | 79 | 99 | - | 99 | 203 | - | 203 | |||||||||||||||||
| Arrangement fees | - | - | - | - | - | - | - | - | - | |||||||||||||||||
| Investment managementfees | (52) | (52) | (104) | (65) | (65) | (130) | (121) | (121) | (242) | |||||||||||||||||
| Other expenses | (90) | - | (90) | (98) | - | (98) | (197) | - | (197) | |||||||||||||||||
| (Loss)/profit on ordinaryactivities before taxation | (63) | 6 | (57) | (64) | (143) | (207) | (115) | (29) | (144) | |||||||||||||||||
| Tax on ordinary activities | - | - | - | - | - | - | - | - | - | |||||||||||||||||
| (Loss)/profit attributableto equity shareholders | (63) | 6 | (57) | (64) | (143) | (207) | (115) | (29) | (144) | |||||||||||||||||
| Other ComprehensiveIncome | - | - | - | - | - | - | - | - | - | |||||||||||||||||
| Total ComprehensiveIncome for the financialperiod | (63) | 6 | (57) | (64) | (143) | (207) | (115) | (29) | (144) | |||||||||||||||||
| Basic and diluted return per share (pence) | ||||||||||||||||||||||||||
| Ordinary share | 5 | - | - | - | - | - | - | - | - | - | ||||||||||||||||
| C share | 5 | - | - | - | (0.6) | (0.6) | (1.2) | (1.1) | (0.7) | (1.8) | ||||||||||||||||
| D share | 5 | - | (0.2) | (0.2) | 0.5 | (1.8) | (1.3) | 0.3 | (0.5) | (0.2) | ||||||||||||||||
| E share | 5 | (0.3) | 0.5 | 0.2 | (0.4) | (0.7) | (1.1) | 0.3 | - | 0.3 | ||||||||||||||||
| F share | 5 | (0.4) | 0.4 | - | (0.5) | (0.6) | (1.1) | (0.3) | (0.1) | (0.4) | ||||||||||||||||
| G share | 5 | (0.6) | (0.7) | (1.3) | (0.9) | - | (1.4) | (1.5) | (0.5) | (2.0) | ||||||||||||||||
| H share | 5 | (1.1) | 0.8 | (0.3) | (1.1) | 0.8 | (0.3) | (2.2) | 1.6 | (0.6) | ||||||||||||||||
The Company had no recognised gains and losses other than those disclosed above.
The total column is the Income Statement of all share classes for the period. The supplementary capital and revenue columns are prepared following guidance published by the Association of Investment Companies (AIC).
The accompanying notes form an integral part of these financial statements.
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE ORDINARY, C, D, E, F, G AND H SHARE FUNDSCONDENSED INCOME STATEMENT (UNAUDITED)for the six months ended 30 June 2015
| Ordinary shares | C shares | ||||||||||||||
| Revenue | Capital | Total | Revenue | Capital | Total | ||||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||||||
| Profit on disposal ofinvestments | - | - | - | - | - | - | |||||||||
| Increase in fair value ofinvestments held | - | - | - | - | - | - | |||||||||
| Investment income | - | - | - | - | - | - | |||||||||
| Arrangement fees | - | - | - | - | - | - | |||||||||
| Investment management fees | - | - | - | - | - | - | |||||||||
| Other expenses | - | - | - | - | - | - | |||||||||
| Profit on ordinary activitiesbefore taxation | - | - | - | - | - | - | |||||||||
| Tax on ordinary activities | - | - | - | - | - | - | |||||||||
| Profit attributable to equityshareholders | - | - | - | - | - | - | |||||||||
| Basic and diluted return pershare (pence) | - | - | - | - | - | - | |||||||||
| D shares | E shares | ||||||||||||||
| Revenue | Capital | Total | Revenue | Capital | Total | ||||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||||||
| Gain on disposal ofinvestments | - | 8 | 8 | - | 3 | 3 | |||||||||
| (Decrease)/increase in fairvalue of investments held | - | (6) | (6) | - | 19 | 19 | |||||||||
| Investment income | 44 | - | 44 | 15 | - | 15 | |||||||||
| Arrangement fees | - | - | - | - | - | - | |||||||||
| Investment management fees | (16) | (16) | (32) | (9) | (9) | (18) | |||||||||
| Other expenses | (28) | - | (28) | (12) | - | (12) | |||||||||
| Profit/(loss) on ordinaryactivities before taxation | - | (14) | (14) | (6) | 13 | 7 | |||||||||
| Tax on ordinary activities | - | - | - | - | - | - | |||||||||
| Profit/(loss) attributable toequity shareholders | - | (14) | (14) | (7) | 14 | 7 | |||||||||
| Basic and diluted return pershare (pence) | - | (0.2) | (0.2) | (0.2) | 0.5 | 0.2 | |||||||||
| F shares | G shares | ||||||||||||||
| Revenue | Capital | Total | Revenue | Capital | Total | ||||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||||||
| Gain on disposal ofinvestments | - | 11 | 11 | - | 2 | 2 | |||||||||
| Increase/(decrease) in fairvalue of investments held | - | 1 | 1 | - | (13) | (13) | |||||||||
| Investment income | 8 | - | 8 | 12 | - | 12 | |||||||||
| Arrangement fees | - | - | - | - | - | - | |||||||||
| Investment management fees | (5) | (5) | (10) | (12) | (12) | (24) | |||||||||
| Other expenses | (10) | - | (10) | (21) | - | (21) | |||||||||
| (Loss)/profit on ordinaryactivities before taxation | (7) | 7 | - | (21) | (23) | (44) | |||||||||
| Tax on ordinary activities | - | - | - | - | - | - | |||||||||
| (Loss)/profit attributable toequity shareholders | (7) | 7 | - | (21) | (23) | (44) | |||||||||
| Basic and diluted return pershare (pence) | (0.4) | 0.4 | - | (0.6) | (0.7) | (1.3) | |||||||||
| H shares | |||||||||||||||
| Revenue | Capital | Total | |||||||||||||
| £'000 | £'000 | £'000 | |||||||||||||
| Profit on disposal ofinvestments | - | 36 | 36 | ||||||||||||
| Decrease in fair value ofinvestments held | - | (3) | (3) | ||||||||||||
| Investment income | - | - | - | ||||||||||||
| Arrangement fees | - | - | - | ||||||||||||
| Investment management fees | (10) | (10) | (20) | ||||||||||||
| Other expenses | (19) | - | (19) | ||||||||||||
| (Loss)/profit on ordinaryactivities before taxation | (29) | 23 | (6) | ||||||||||||
| Tax on ordinary activities | - | - | - | ||||||||||||
| (Loss)/profit attributable toequity shareholders | (28) | 22 | (6) | ||||||||||||
| Basic and diluted return pershare (pence) | (1.1) | 0.8 | (0.3) | ||||||||||||
The Company had no recognised gains and losses other than those disclosed above.
The total column is the Income Statement per share class for the period. The supplementary capital and revenue columns are prepared following guidance published by the AIC.
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE ORDINARY, C, D, E, F, G AND H SHARE FUNDSCONDENSED INCOME STATEMENT (UNAUDITED)for the six months ended 30 June 2014
| Ordinary shares | C shares | ||||||||||||||
| Revenue | Capital | Total | Revenue | Capital | Total | ||||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||||||
| Loss on disposal ofinvestments | - | - | - | - | (8) | (8) | |||||||||
| Decrease in fair value ofinvestments held | - | - | - | - | (4) | (4) | |||||||||
| Investment income | - | - | - | 4 | - | 4 | |||||||||
| Arrangement fees | - | - | - | - | - | - | |||||||||
| Investment management fees | - | - | - | (6) | (6) | (12) | |||||||||
| Other expenses | - | - | - | (15) | - | (15) | |||||||||
| Loss on ordinary activitiesbefore taxation | - | - | - | (17) | (18) | (35) | |||||||||
| Tax on ordinary activities | - | - | - | - | - | - | |||||||||
| Loss attributable to equityshareholders | - | - | - | (17) | (18) | (35) | |||||||||
| Basic and diluted return pershare (pence) | - | - | - | (0.6) | (0.6) | (1.2) | |||||||||
| D shares | E shares | ||||||||||||||
| Revenue | Capital | Total | Revenue | Capital | Total | ||||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||||||
| Gain on disposal ofinvestments | - | 7 | 7 | - | 2 | 2 | |||||||||
| Decrease in fair value ofinvestments held | - | (106) | (106) | - | (12) | (12) | |||||||||
| Investment income | 77 | - | 77 | 11 | - | 11 | |||||||||
| Arrangement fees | - | - | - | - | - | - | |||||||||
| Investment management fees | (20) | (20) | (40) | (9) | (9) | (18) | |||||||||
| Other expenses | (25) | - | (25) | (12) | - | (12) | |||||||||
| Profit/(loss) on ordinaryactivities before taxation | 32 | (119) | (87) | (10) | (19) | (29) | |||||||||
| Tax on ordinary activities | - | - | - | - | - | - | |||||||||
| Profit/(loss) attributable toequity shareholders | 32 | (119) | (87) | (10) | (19) | (29) | |||||||||
| Basic and diluted return pershare (pence) | 0.5 | (1.8) | (1.3) | (0.4) | (0.7) | (1.1) | |||||||||
| F shares | G shares | ||||||||||||||
| Revenue | Capital | Total | Revenue | Capital | Total | ||||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||||||
| Gain on disposal ofinvestments | - | 20 | 20 | - | 26 | 26 | |||||||||
| Decrease in fair value ofinvestments held | - | (24) | (24) | - | (12) | (12) | |||||||||
| Investment income | 7 | - | 7 | - | - | - | |||||||||
| Arrangement fees | - | - | - | - | - | - | |||||||||
| Investment management fees | (6) | (6) | (12) | (13) | (13) | (26) | |||||||||
| Other expenses | (9) | - | (9) | (19) | - | (19) | |||||||||
| (Loss)/profit on ordinaryactivities before taxation | (8) | (10) | (18) | (32) | 1 | (31) | |||||||||
| Tax on ordinary activities | - | - | - | - | - | - | |||||||||
| (Loss)/profit attributable toequity shareholders | (8) | (10) | (18) | (32) | 1 | (31) | |||||||||
| Basic and diluted return pershare (pence) | (0.5) | (0.6) | (1.1) | (0.9) | - | (0.9) | |||||||||
| H shares | |||||||||||||||
| Revenue | Capital | Total | |||||||||||||
| £'000 | £'000 | £'000 | |||||||||||||
| Loss on disposal ofinvestments | - | (1) | (1) | ||||||||||||
| Increase in fair value ofinvestments held | - | 34 | 34 | ||||||||||||
| Investment income | - | - | - | ||||||||||||
| Arrangement fees | - | - | - | ||||||||||||
| Investment management fees | (11) | (11) | (22) | ||||||||||||
| Other expenses | (18) | - | (18) | ||||||||||||
| (Loss)/profit on ordinaryactivities before taxation | (29) | 22 | (7) | ||||||||||||
| Tax on ordinary activities | - | - | - | ||||||||||||
| (Loss)/profit attributable toequity shareholders | (29) | 22 | (7) | ||||||||||||
| Basic and diluted return pershare (pence) | (1.1) | 0.8 | (0.3) | ||||||||||||
The Company had no recognised gains and losses other than those disclosed above.
The total column is the Income Statement per share class for the period. The supplementary capital and revenue columns are prepared following guidance published by the AIC.
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE ORDINARY, C, D, E, F, G AND H SHARE FUNDSCONDENSED INCOME STATEMENT (UNAUDITED)for the year ended 31 December 2014
| Ordinary shares | C shares | ||||||||||||||
| Revenue | Capital | Total | Revenue | Capital | Total | ||||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||||||
| Loss on disposal ofinvestments | - | - | - | - | (6) | (6) | |||||||||
| Decrease in fair value ofinvestments held | - | - | - | - | (5) | (5) | |||||||||
| Investment income | - | - | - | 4 | - | 4 | |||||||||
| Arrangement fees | - | - | - | - | - | - | |||||||||
| Investment management fees | - | - | - | (7) | (7) | (14) | |||||||||
| Other expenses | - | - | - | (26) | - | (26) | |||||||||
| - | - | - | |||||||||||||
| Loss on ordinary activitiesbefore taxation | - | - | - | (29) | (18) | (47) | |||||||||
| Tax on ordinary activities | - | - | - | - | - | - | |||||||||
| Loss attributable to equityshareholders | - | - | - | (29) | (18) | (47) | |||||||||
| Basic and diluted return pershare (pence) | - | - | - | (1.1) | (0.7) | (1.8) | |||||||||
| D shares | E shares | ||||||||||||||
| Revenue | Capital | Total | Revenue | Capital | Total | ||||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||||||
| Gain/(loss) on disposal ofinvestments | - | 8 | 8 | - | (8) | (8) | |||||||||
| (Decrease)/increase in fairvalue of investments held | - | (6) | (6) | - | 26 | 26 | |||||||||
| Investment income | 116 | - | 116 | 49 | - | 49 | |||||||||
| Arrangement fees | - | - | - | - | - | - | |||||||||
| Investment management fees | (38) | (38) | (76) | (18) | (18) | (36) | |||||||||
| Other expenses | (55) | - | (55) | (24) | - | (24) | |||||||||
| Profit/(loss) on ordinaryactivities before taxation | 23 | (36) | (13) | 7 | - | 7 | |||||||||
| Tax on ordinary activities | - | - | - | - | - | - | |||||||||
| Profit/(loss) attributable toequity shareholders | 23 | (36) | (13) | 7 | - | 7 | |||||||||
| Basic and diluted return pershare (pence) | 0.3 | (0.5) | (0.2) | 0.3 | - | 0.3 | |||||||||
| F shares | G shares | ||||||||||||||
| Revenue | Capital | Total | Revenue | Capital | Total | ||||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||||||
| Gain on disposal ofinvestments | - | 14 | 14 | - | 61 | 61 | |||||||||
| Decrease in fair value ofinvestments held | - | (4) | (4) | - | (51) | (51) | |||||||||
| Investment income | 23 | - | 23 | 11 | - | 11 | |||||||||
| Arrangement fees | - | - | - | - | - | - | |||||||||
| Investment management fees | (11) | (11) | (22) | (26) | (26) | (52) | |||||||||
| Other expenses | (17) | - | (17) | (38) | - | (38) | |||||||||
| Loss on ordinary activitiesbefore taxation | (5) | (1) | (6) | (53) | (16) | (69) | |||||||||
| Tax on ordinary activities | - | - | - | - | - | - | |||||||||
| Loss attributable to equityshareholders | (5) | (1) | (6) | (53) | (16) | (69) | |||||||||
| Basic and diluted return pershare (pence) | (0.3) | (0.1) | (0.4) | (1.5) | (0.5) | (2.0) | |||||||||
| H shares | |||||||||||||||
| Revenue | Capital | Total | |||||||||||||
| £'000 | £'000 | £'000 | |||||||||||||
| Loss on disposal ofinvestments | - | (5) | (5) | ||||||||||||
| Increase in fair value ofinvestments held | - | 68 | 68 | ||||||||||||
| Investment income | - | - | - | ||||||||||||
| Arrangement fees | - | - | - | ||||||||||||
| Investment management fees | (21) | (21) | (42) | ||||||||||||
| Other expenses | (37) | - | (37) | ||||||||||||
| (Loss)/profit on ordinaryactivities before taxation | (58) | 42 | (16) | ||||||||||||
| Tax on ordinary activities | - | - | - | ||||||||||||
| (Loss)/profit attributable toequity shareholders | (58) | 42 | (16) | ||||||||||||
| Basic and diluted return pershare (pence) | (2.2) | (1.6) | (0.6) | ||||||||||||
The Company had no recognised gains and losses other than those disclosed above.
The total column is the Income Statement per share class for the period. The supplementary capital and revenue columns are prepared following guidance published by the AIC.
CONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED)as at 30 June 2015
| 30 June2015(unaudited) | 30 June2014(unaudited) | 31 December2014(audited) | ||||||||
| Note | £'000 | £'000 | £'000 | |||||||
| Fixed assets | ||||||||||
| Qualifying Investments | 6 | 7,240 | 7,311 | 8,280 | ||||||
| Current assets | ||||||||||
| Debtors | 50 | 76 | 22 | |||||||
| Non-qualifying Investments | 6 | 3,147 | 5,663 | 4,396 | ||||||
| Cash at bank and in hand | 398 | 732 | 54 | |||||||
| 3,595 | 6,471 | 4,472 | ||||||||
| Creditors: amounts falling due within oneyear | (69) | (49) | (54) | |||||||
| Net current assets | 3,526 | 6,422 | 4,418 | |||||||
| Total assets less current liabilities | 10,766 | 13,733 | 12,698 | |||||||
| Capital and reserves | ||||||||||
| Called-up share capital | 174 | 202 | 174 | |||||||
| Share premium account | - | - | - | |||||||
| Other reserve account | 13,048 | 15,993 | 14,923 | |||||||
| Capital reserve | (1,298) | (1,418) | (1,304) | |||||||
| Revenue reserve | (1,158) | (1,044) | (1,095) | |||||||
| Total shareholders’ funds | 10,766 | 13,733 | 12,698 | |||||||
| Net asset value per Ordinary share (pence) | 7 | - | - | - | ||||||
| Net asset value per C share (pence) | 7 | - | 39.5 | - | ||||||
| Net asset value per D share (pence) | 7 | 44.1 | 63.2 | 64.3 | ||||||
| Net asset value per E share (pence) | 7 | 67.4 | 70.9 | 72.2 | ||||||
| Net asset value per F share (pence) | 7 | 69.7 | 73.9 | 74.7 | ||||||
| Net asset value per G share (pence) | 7 | 73.4 | 80.8 | 79.7 | ||||||
| Net asset value per H share (pence) | 7 | 82.7 | 88.2 | 87.9 | ||||||
The accompanying notes form an integral part of these financial statements.
The condensed set of financial statements were approved by the Board of Directors on 18 August 2015 and signed on its behalf by:
Keith TurnerDirectorCompany Registration Number: 6395011 (England & Wales)
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE ORDINARY, C, D, E, F, G AND H SHARE FUNDSCONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
| As at 30 June 2015 (unaudited) | |||||||||||||||
| Ordinaryshares£'000 | Cshares£'000 | Dshares£'000 | Eshares£'000 | Fshares£'000 | Gshares£'000 | Hshares£'000 | |||||||||
| Fixed assets | |||||||||||||||
| Qualifying Investments | - | - | 2,570 | 1,637 | 908 | 2,125 | - | ||||||||
| Current assets | |||||||||||||||
| Debtors | - | - | 50 | - | - | - | - | ||||||||
| Non-qualifying Investments | - | - | - | 286 | 190 | 465 | 2,206 | ||||||||
| Cash at bank and in hand | - | - | 383 | 4 | 2 | 5 | 4 | ||||||||
| - | - | 433 | 290 | 192 | 470 | 2,210 | |||||||||
| Creditors: amounts falling duewithin one year | - | - | (34) | (9) | (4) | (12) | (10) | ||||||||
| Net current assets | - | - | 399 | 281 | 188 | 458 | 2,200 | ||||||||
| Total assets less currentliabilities | - | - | 2,969 | 1,918 | 1,096 | 2,583 | 2,200 | ||||||||
| Capital and reserves | |||||||||||||||
| Called-up share capital | - | - | 68 | 28 | 16 | 35 | 27 | ||||||||
| Share premium account | - | - | - | - | - | - | - | ||||||||
| Other reserve account | 617 | 439 | 3,657 | 2,124 | 1,173 | 2,800 | 2,238 | ||||||||
| Capital reserve | (538) | (228) | (503) | (90) | 12 | (25) | 74 | ||||||||
| Revenue reserve | (79) | (211) | (253) | (144) | (105) | (227) | (139) | ||||||||
| Total shareholders’ funds | - | - | 2,969 | 1,918 | 1,096 | 2,583 | 2,200 | ||||||||
| Net asset value excludingdistributions to date (pence pershare) | - | - | 44.1 | 67.4 | 69.7 | 73.4 | 82.7 | ||||||||
| Net asset value includingdistributions to date (pence pershare) | - | - | 84.1 | 87.4 | 89.6 | 88.4 | 92.7 | ||||||||
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE ORDINARY, C, D, E, F, G AND H SHARE FUNDSCONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
| As at 30 June 2014 (unaudited) | |||||||||||||||
| Ordinaryshares£'000 | Cshares£'000 | Dshares£'000 | Eshares£'000 | Fshares£'000 | Gshares£'000 | Hshares£'000 | |||||||||
| Fixed assets | |||||||||||||||
| Qualifying Investments | - | 375 | 3,526 | 1,542 | 868 | 1,000 | - | ||||||||
| Current assets | |||||||||||||||
| Debtors | - | 37 | 39 | - | - | - | - | ||||||||
| Non-qualifying Investments | - | - | 697 | 479 | 296 | 1,843 | 2,348 | ||||||||
| Cash at bank and in hand | - | 722 | - | 1 | - | 3 | 6 | ||||||||
| - | 759 | 736 | 480 | 296 | 1,846 | 2,354 | |||||||||
| Creditors: amounts falling duewithin one year | - | (24) | (7) | (4) | (3) | (5) | (6) | ||||||||
| Net current assets | - | 735 | 729 | 476 | 293 | 1,841 | 2,348 | ||||||||
| Total assets less currentliabilities | - | 1,110 | 4,255 | 2,018 | 1,161 | 2,841 | 2,348 | ||||||||
| Capital and reserves | |||||||||||||||
| Called-up share capital | - | 28 | 68 | 28 | 16 | 35 | 27 | ||||||||
| Share premium account | - | - | - | - | - | - | - | ||||||||
| Other reserve account | 617 | 1,509 | 5,003 | 2,267 | 1,250 | 2,976 | 2,371 | ||||||||
| Capital reserve | (538) | (228) | (572) | (122) | (4) | 15 | 31 | ||||||||
| Revenue reserve | (79) | (199) | (244) | (155) | (101) | (185) | (81) | ||||||||
| Total shareholders’ funds | - | 1,110 | 4,255 | 2,018 | 1,161 | 2,841 | 2,348 | ||||||||
| Net asset value excludingdistributions to date (pence pershare) | - | 39.5 | 63.2 | 70.9 | 73.9 | 80.8 | 88.2 | ||||||||
| Net asset value includingdistributions to date (pence pershare) | - | 79.5 | 83.2 | 85.9 | 88.9 | 90.8 | 93.2 | ||||||||
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE ORDINARY, C, D, E, F, G AND H SHARE FUNDSCONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
| As at 31 December 2014 (audited) | |||||||||||||||
| Ordinaryshares£'000 | Cshares£'000 | Dshares£'000 | Eshares£'000 | Fshares£'000 | Gshares£'000 | Hshares£'000 | |||||||||
| Fixed assets | |||||||||||||||
| Qualifying Investments | - | - | 3,660 | 1,602 | 893 | 2,125 | - | ||||||||
| Current assets | |||||||||||||||
| Debtors | - | - | 22 | - | - | - | - | ||||||||
| Non-qualifying Investments | - | - | 637 | 451 | 282 | 683 | 2,343 | ||||||||
| Cash at bank and in hand | - | 6 | 39 | 6 | 1 | 1 | 1 | ||||||||
| - | 6 | 698 | 457 | 283 | 684 | 2,344 | |||||||||
| Creditors: amounts falling duewithin one year | - | (6) | (29) | (5) | (3) | (6) | (5) | ||||||||
| Net current assets | - | - | 669 | 452 | 280 | 678 | 2,339 | ||||||||
| Total assets less currentliabilities | - | - | 4,329 | 2,054 | 1,173 | 2,803 | 2,339 | ||||||||
| Capital and reserves | |||||||||||||||
| Called-up share capital | - | - | 68 | 28 | 16 | 35 | 27 | ||||||||
| Share premium account | - | - | - | - | - | - | - | ||||||||
| Other reserve account | 617 | 439 | 5,003 | 2,267 | 1,250 | 2,976 | 2,371 | ||||||||
| Capital reserve | (538) | (228) | (489) | (103) | 5 | (2) | 51 | ||||||||
| Revenue reserve | (79) | (211) | (253) | (138) | (98) | (206) | (110) | ||||||||
| Total shareholders’ funds | - | - | 4,329 | 2,054 | 1,173 | 2,803 | 2,339 | ||||||||
| Net asset value excludingdistributions to date (pence pershare) | - | - | 64.3 | 72.2 | 74.7 | 79.7 | 87.9 | ||||||||
| Net asset value includingdistributions to date (pence pershare) | - | - | 84.3 | 87.2 | 89.7 | 89.7 | 92.9 | ||||||||
STATEMENT OF CHANGES IN EQUITY (UNAUDITED)for the six months ended 30 June 2015
| Six months ended30 June 2015(unaudited) | Six months ended30 June 2014(unaudited) | Year ended31 December 2014(audited) | ||||
| £'000 | £'000 | £'000 | ||||
| Opening shareholders’ funds | 12,698 | 15,471 | 15,471 | |||
| Capital subscribed | - | - | - | |||
| Issue costs | - | - | - | |||
| Dividends | (1,875) | (1,429) | (2,629) | |||
| Capital distribution | - | (102) | - | |||
| Total comprehensive loss forthe period | (57) | (207) | (144) | |||
| Closing shareholders’ funds | 10,766 | 13,733 | 12,698 | |||
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE ORDINARY, C, D, E, F, G AND H SHARE FUNDSSTATEMENT OF CHANGES IN EQUITY (UNAUDITED)for the six months ended 30 June 2015
| Ordinaryshares | C shares | D shares | E shares | F shares | G shares | H shares | |||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||||||||
| Opening shareholders’ funds | - | - | 4,329 | 2,054 | 1,173 | 2,803 | 2,339 | ||||||||
| Dividends | - | - | (1,346) | (143) | (77) | (176) | (133) | ||||||||
| Capital distribution | - | - | - | - | - | - | - | ||||||||
| (Loss)/profit for the period | - | - | (14) | 7 | - | (44) | (6) | ||||||||
| Closing shareholders’ funds | - | - | 2,969 | 1,918 | 1,096 | 2,583 | 2,200 | ||||||||
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE ORDINARY, C, D, E, F, G AND H SHARE FUNDSSTATEMENT OF CHANGES IN EQUITY (UNAUDITED)for the six months ended 30 June 2014
| Ordinaryshares | C shares | D shares | E shares | F shares | G shares | H shares | |||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||||||||
| Opening shareholders’ funds | 102 | 1,707 | 4,679 | 2,189 | 1,258 | 3,048 | 2,488 | ||||||||
| Dividends | - | (562) | (337) | (142) | (79) | (176) | (133) | ||||||||
| Capital distribution | (102) | - | - | - | - | - | - | ||||||||
| Loss for the period | - | (35) | (87) | (29) | (18) | (31) | (7) | ||||||||
| Closing shareholders’ funds | - | 1,110 | 4,255 | 2,018 | 1,161 | 2,841 | 2,348 | ||||||||
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE ORDINARY, C, D, E, F, G AND H SHARE FUNDSSTATEMENT OF CHANGES IN EQUITY (UNAUDITED)for the year ended 31 December 2014
| Ordinaryshares | C shares | D shares | E shares | F shares | G shares | H shares | |||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||||||||
| Opening shareholders’ funds | 102 | 1,707 | 4,679 | 2,189 | 1,258 | 3,048 | 2,488 | ||||||||
| Capital subscribed | - | - | - | - | - | - | - | ||||||||
| Issue costs | - | - | - | - | - | - | - | ||||||||
| Dividends | (102) | (1,660) | (337) | (142) | (79) | (176) | (133) | ||||||||
| (Loss)/profit for the period | - | (47) | (13) | 7 | (6) | (69) | (16) | ||||||||
| Closing shareholders’ funds | - | - | 4,329 | 2,054 | 1,173 | 2,803 | 2,339 | ||||||||
STATEMENT OF CASH FLOWS (UNAUDITED)for the six months ended 30 June 2015
| 30 June 2015(unaudited) | 30 June 2014(unaudited) | 31 December 2014(audited) | |||||
| £'000 | £'000 | £'000 | |||||
| Net cash flows from operating activities | (227) | (264) | (396) | ||||
| Cash flows from investing activities | |||||||
| Purchase of Qualifying Investments | - | (1,000) | (2,625) | ||||
| Return of Qualifying Investments | 1,137 | 854 | 1,729 | ||||
| Purchase of Non-qualifying Investments | - | - | - | ||||
| Disposal of Non-qualifying Investments | 60 | 51 | 86 | ||||
| Net cash in/(outflow) from investing activities | 1,197 | (95) | (810) | ||||
|
| |||||||
| Cash flows from financing activities | |||||||
| Issue of shares | - | - | - | ||||
| Issue costs of shares | - | - | - | ||||
| Payment of dividends/capital distribution | (1,875) | (1,531) | (2,629) | ||||
| Net cash outflow flow from financing activities | (1,875) | (1,531) | (2,629) | ||||
| Net decrease in cash and cash equivalents | (905) | (1,890) | (3,835) | ||||
| Opening cash and cash equivalents | 4,447 | 8,282 | 8,282 | ||||
| Closing cash and cash equivalents | 3,542 | 6,392 | 4,447 | ||||
| Reconciliation of loss before taxation to net cash flow from operating activities | |||||||
| £'000 | £'000 | £'000 | |||||
| Loss on ordinary activities before tax | (57) | (207) | (144) | ||||
| (Increase)/decrease in fair value of investments held | (78) | 75 | (108) | ||||
| Investment income | (79) | (63) | (134) | ||||
| (Increase)/decrease in receivables | (28) | (37) | 17 | ||||
| Increase/(decrease) in payables | 15 | (32) | (27) | ||||
| Net cash flow from operating activities | (227) | (264) | (396) | ||||
Closing cash and cash equivalents comprise of cash of £398,000 (31 December 2014: £54,000; 30 June 2014: £732,000) and Non-qualifying assets, excluding Investment in Investee Companies, of £3,144,000 (31 December 2014: £4,393,000; 30 June 2014: £5,660,000).
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)for the six months ended 30 June 2015
1. Accounting Policies
a) Basis of Accounting
The financial statements for the Reporting Period have been prepared in compliance with applicable UK Accounting Standards, being FRS 102 - The Financial Reporting Standard, the Companies Act 2006 and with the Statement of Recommended Practice (the SORP) entitled “Financial Statements of Investment Trust Companies and Venture Capital Trusts” (with the exception of paragraph 82 of the SORP regarding detailed disclosure of financial and operational performance of the Company’s unquoted investments due to their confidential nature) which was issued in November 2014. The half year accounts are prepared in accordance with Financial Reporting Standards 104 – Interim Financial Reporting.
The financial statements have been prepared on a going concern basis under the historical cost convention, modified to include certain items at fair value. The principal accounting policies have remained unchanged from those set out in the Company’s 2014 Annual Report and Accounts.
b) Financial Instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.
(i) Valuation of Investments
The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. As set out in each Prospectus all investments are designated at fair value.
International Private Equity and Venture Capital Valuation Guidelines
Unquoted investments, including equity and loan investments, are designated at fair value through profit and loss and are valued in accordance with the International Private Equity and Venture Capital (IPEVC) Guidelines. Investments are initially recognised at fair value. The fair value is subsequently re-measured, as estimated by the Directors. Investment holding gains or losses arising from the revaluation of investments are recognised in the profit and loss. Fair value is determined as follows:
Fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction. In estimating the fair value for an investment, the Manager will apply a methodology that is appropriate in light of the nature, facts and circumstances of the investment and its materiality in the context of the total investment portfolio and will use reasonable assumptions and estimations. An appropriate methodology incorporates available information about all factors that are likely to materially affect the fair value of the investment. The valuation methodologies are applied consistently from period to period, except where a change would result in a better estimate of fair value. Any changes in valuation methodologies will be clearly disclosed in the financial statements.The most widely used methodologies are listed below. In assessing which methodology is appropriate, the Directors are predisposed towards those methodologies that draw upon market-based measures of risk and return.
Price of recent investment Discounted cash flows/earnings multiple Net assets Available market pricesOf these the two methodologies most applicable to the Company’s investments are:
1 - Price of recent investment
Where the investment being valued was made recently, its cost will generally provide a good indication of value. It is generally considered that this would only apply for a limited period; in practice a period up to the start of the first live event or entertainment content which forms the investment is often applied as the long stop date for such a valuation.
2 - Discounted cash flows/earnings of the underlying business
Investments can be valued by calculating the net present value of expected future cash flows of the Investee Companies. In relation to the Company’s investments, anticipating future cash flows in excess of the guaranteed amounts would clearly require highly subjective judgements to be made in the early stage of each investment and therefore would not be an appropriate methodology to apply in the early stage of the investment.
In the period prior to the second live event or entertainment content it is considered appropriate to use the price paid for the recent investment as the latest available information. Thereafter, the portfolio of investments is fair valued on the discounted cash flow/earnings basis using the latest available information on the performance of the live event or entertainment content. Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the Income Statement in the period in which they arise.
As a result of the above basis of valuation, there is significant judgement associated with the valuation of investments.
Non-qualifying Investments - OEICs
The Company’s Non-qualifying Investments in interest bearing money market OEICs are valued at fair value which is bid price. They have been designated as fair value through profit or loss for the purposes of FRS 102.
Gains and losses arising from changes in fair value of Qualifying and Non-qualifying Investments are recognised as part of the capital return within the profit or loss and allocated to the realised or unrealised capital reserve as appropriate. Transaction costs attributable to the acquisition or disposal of investments are charged to capital within the profit or loss.
(ii) Financial assets and liabilities
All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing transaction. If an arrangement constitutes a finance transaction, the financial asset or financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
Financial assets and liabilities are only offset in the balance sheet when there exists a legally enforceable right to set off the recognised amounts and the Company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Debt instruments which meet the following conditions are subsequently measured at amortised cost using the effective interest method:
(a) Returns to the holder are (i) a fixed amount; or (ii) a fixed rate of return over the life of the instrument; or (iii) a variable return that, throughout the life of the instrument, is equal to a single referenced quoted or observable interest rate; or (iv) some combination of such fixed rate and variable rates, providing that both rates are positive.
(b) There is no contractual provision that could, by its terms, result in the holder losing the principal amount or any interest attributable to the current period.
(c) Contractual provisions that permit the issuer to prepay a debt instrument or permit the holder to put it back to the issuer before maturity are not contingent on future events, other than to protect the holder against the credit deterioration of the issuer or a change in control of the issuer, or to protect the holder or issuer against changes in relevant taxation or law.
(d) There are no conditional returns or repayment provisions except for the variable rate return described in (a) and prepayment provisions described in (c).
Debt instruments that are classified as payable or receivable within one period and which meet the above conditions are measured at the undiscounted amount of the cash or other consideration expected to be paid or received, net of impairment.
Other debt instruments not meeting these conditions are measured at fair value through profit or loss.
Commitments to make and receive loans which meet the conditions mentioned above are measured at cost (which may be nil) less impairment.
Financial assets are derecognised when and only when a) the contractual rights to the cash flows from the financial asset expire or are settled, b) the Company transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or c) the Company, despite having retained some significant risks and rewards of ownership, has transferred control of the asset to another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer.
Financial liabilities are derecognised only when the obligation specified in the contract is discharged, cancelled or expires.
c) Investment Income
Interest income is recognised in the profit or loss under the effective interest method. The effective interest rate is the rate required to discount the expected future income streams over the life of the loan to its initial carrying amount. The main impact for the Company in that regard is the accounting treatment of the loan note premiums. Where those loan note premiums are charged in lieu of higher interest then they are credited to income over the life of the advance to the extent those premiums are anticipated to be collected.
d) Dividend Income
Dividend income is recognised in the profit or loss once it is declared by the Investee Companies.
e) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged to the revenue account within the Income Statement except that:
expenses which are incidental to the acquisition or disposal of an investment are charged to capital in the Income Statement as incurred; expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated; and the management fee has been allocated 50% to revenue and 50% to capital, which represents the split of the Company’s long term returns.General expenses were paid for by the Ordinary share class until 31 July 2013, by the C share class until 31 July 2014 and from the D share class 1 August 2014 onwards. The expenses have been recharged on a quarterly basis to the other share classes based on the proportional net asset value per share class as at the last day of the previous quarter.
f) Taxation
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the Balance Sheet date where transactions or events that result in an obligation to pay more, or a right to pay less, tax in the future have occurred at the Balance Sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company’s taxable profits and its results as stated in the financial statements which are capable of reversal in one or more subsequent periods.
g) Ordinary shares, C shares, D shares, E shares, F shares, G shares and H shares
The Company had seven share classes up to 17 December 2013: Ordinary shares, C shares, D shares, E shares, F shares, G shares and H shares. On 20 December 2013 the Company’s capital was reduced by the cancellation and extinguishment of all of its Ordinary shares. On 17 December 2014 the Company’s capital was reduced by the cancellation and extinguishment of all of its C shares. Each share class has a separate pool of income and expenses as well as assets and liabilities attributable to it. All share classes rank pari passu with each other in terms of voting rights.
2. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Company’s accounting policies, which are described in note 1, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
3. Loss on ordinary activities before taxation
Loss on ordinary activities before taxation is stated after charging:
| 30 June2015£’000 | 30 June2014£’000 | 31 December2014£’000 | |||||
| Audit fees | 8,850 | 8,850 | 16,500 | ||||
| 8,850 | 8,850 | 16,500 | |||||
4. Directors remuneration and employees
| 30 June2015£’000 | 30 June2014£’000 | 31 December2014£’000 | |||||
| Aggregate Directors remuneration | 18,750 | 18,750 | 37,500 | ||||
| 18,750 | 18,750 | 37,500 | |||||
The company had no employees during the financial period ended 30 June 2015 (31 December 2014: Nil, 30 June 2014: Nil).
5. Basic and Diluted Return per share
The calculation of the basic return per Ordinary share is based on the return on ordinary activities after tax for the period and on a weighted average of Nil Ordinary shares in issue for the six months ended 30 June 2015 (31 December 2014: Nil; 30 June 2014: 10,205,011). The basic return per C share has been calculated on a weighted average of 2,810,596 C shares in issue for the six months ended 30 June 2015 (31 December 2014: 2,810,596; 30 June 2014: 2,810,596). The basic return per D share has been calculated on a weighted average of 6,735,624 D shares in issue for the six months ended 30 June 2015 (31 December 2014: 6,735,624; 30 June 2014: 6,735,624). The basic return per E share has been calculated on a weighted average of 2,846,122 E shares in issue for the six months ended 30 June 2015 (31 December 2014: 2,846,122; 30 June 2014: 2,846,122). The basic return per F share has been calculated on a weighted average of 1,572,095 F shares in issue for the six months ended 30 June 2015 (31 December 2014: 1,572,095; 30 June 2014: 1,572,095). The basic return per G share has been calculated on a weighted average of 3,518,044 G shares in issue for the six months ended 30 June 2015 (31 December 2014: 3,518,044; 30 June 2014: 3,518,044). The basic return per H share has been calculated on a weighted average of 2,660,842 H shares in issue for the six months ended 30 June 2015 (31 December 2014: 2,660,842; 30 June 2014: 2,660,842).
There are no dilutive potential D shares, E shares, F shares, G shares or H shares, including convertible instruments, options or contingent share agreements in issue for the Company. The basic return per share is therefore the same as the diluted return per share.
6. Investments
| 30 June2015£’000 | 30 June2014£’000 | 31 December2014£’000 | |||||
| Fixed Assets | |||||||
| Level c (ii) | |||||||
| Qualifying Investments: | 7,240 | 7,311 | 8,280 | ||||
| Current Assets | |||||||
| Non-qualifying Investments: | 3,147 | 5,663 | 4,396 | ||||
| 10,387 | 12,974 | 12,676 | |||||
a) Qualifying Investments
Quoted market prices in active markets – “Level a”
Level a: quoted prices in active markets for an identical asset. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held is the current bid price.
Valued using models with significant observable market parameters – “Level b”
Level b: where quoted prices are not available, the price of a recent transaction for an identical asset, providing there has been no significant change in economic circumstances or a significant lapse in time since the transaction took place.
Valued using models with observable parameters – “Level c (i)”
Level c(i): fair values where the value estimate relies on observable market data. The fair value is determined by using valuation techniques. These valuation techniques maximise the use of observable data where it is available and rely as little as possible on entity specific estimates. If all the inputs required to fair value an instrument are observable, the instruments is included in level c (i).
Valued using models with significant unobservable parameters – “Level c (ii)”
Level c(ii): fair values are not traded in an active market and the fair value is determined by using valuation techniques such as less recent third party transactions or earnings multiples. If one or more of the significant inputs is not based on observable market data, the instrument is included in level c (ii). The company's unquoted investments all fall into this category.
There have been no transfers between these classifications in the year. The change in fair value for the current and previous year is recognised through the statement of comprehensive income.
b) Non-qualifying Investments
In order to safeguard the capital available for investment in VCT Qualifying Investments and balance this with the need to provide good returns to investors, available funds from the net proceeds are invested in appropriate securities (money market securities and cash funds) until required for Qualifying Investment purposes.
7. Net Asset Value per share
The unaudited net asset value per C share has been calculated based on Nil C shares being the number of C shares in issue as at 30 June 2015 (31 December 2014: Nil; 30 June 2014: 2,810,596).
The unaudited net asset value per D share has been calculated based on 6,735,624 D shares being the number of D shares in issue as at 30 June 2015 (31 December 2014: 6,735,624; 30 June 2014: 6,735,624).
The unaudited net asset value per E share has been calculated based on 2,846,122 E shares being the number of E shares in issue as at 30 June 2015 (31 December 2014: 2,846,122; 30 June 2014: 2,846,122).
The unaudited net asset value per F share has been calculated based on 1,572,095 F shares being the number of F shares in issue as at 30 June 2015 (31 December 2014: 1,572,095; 30 June 2014: 1,572,095).
The unaudited net asset value per G share has been calculated based on 3,518,044 G shares being the number of G shares in issue as at 30 June 2015 (31 December 2014: 3,518,044; 30 June 2014: 3,518,044).
The unaudited net asset value per H share has been calculated based on 2,660,842 H shares being the number of H shares in issue as at 30 June 2015 (31 December 2014: 2,660,842; 30 June 2014: 2,660,842).
8. Related Party Transactions
a. The Company has appointed Ingenious Media Investments Limited, a company of which Patrick McKenna is a director, to be its promoter. Ingenious Media Investments Limited is a wholly owned subsidiary within the Ingenious Media Holdings plc group of companies, which is controlled by Patrick McKenna.
b. The Company has appointed Ingenious Ventures as Manager. Ingenious Ventures is a trading division of Ingenious Capital Management Limited. Patrick McKenna is a director of Ingenious Capital Management Limited which is a subsidiary of Ingenious Capital Management Holdings Limited, which is controlled by Patrick McKenna.
The Manager, as per the management agreement, receives a management fee of 0.4375% of the net asset value payable quarterly in advance (1.75% annualised). The Manager also receives an administration fee of £87,000 per annum from the Company.
c. The funds invested in OEICs are managed by Ingenious Asset Management Limited, a company of which Patrick McKenna is a director. Ingenious Asset Management Limited is a subsidiary of Ingenious Asset Management Group Limited, which is controlled by Patrick McKenna. There is no fee to the Company associated with this transaction.
d. Patrick McKenna is a director and a shareholder of Ingenious Entertainment VCT 2 plc. The Company and Ingenious Entertainment VCT 2 plc jointly agreed to form a new company, The Zoo Project Festival Limited, to stage the third Zoo Project Festival which will took place at Donington Park in the East Midlands in September 2014. In March 2014, the Company invested £300,000 in The Zoo Project Festival Limited - £210,000 for an 18.75% equity stake together with a £90,000 loan note instrument. Ingenious Entertainment VCT 2 plc also invested £300,000 in The Zoo Project Festival Limited - £210,000 for an 18.75% equity stake and a £90,000 loan note instrument.
e. Patrick McKenna is a director and a shareholder of Ingenious Entertainment VCT 2 plc. The Company and Ingenious Entertainment VCT 2 plc jointly agreed to form a new company, FM3 2013 Limited, to produce and distribute live entertainment content, particularly in the area of music festivals. In March 2014 the Company invested £700,000 in FM3 2013 Limited - £490,000 for a 20% equity stake together with a £210,000 loan note instrument. Ingenious Entertainment VCT 2 plc also invested £700,000 in FM3 2013 Limited - £490,000 for a 20% equity stake together with a £210,000 loan note instrument.
During the period the Company has carried out a number of transactions with the above-mentioned related parties in the normal course of business and on an arm’s length basis:
| Expenditure Paid | Amounts Due | ||||||||||||||||
| Entity | Note | 30 June2015£'000 | 30 June2014£'000 | 31 December2014£'000 | 30 June2015£'000 | 30 June2014£'000 | 31 December2014£'000 | ||||||||||
| Ingenious Capital Management Limited | |||||||||||||||||
| - Investment management fee | b | 104 | 130 | 242 | - | - | - | ||||||||||
| - Administration fee | b | 38 | 48 | 88 | - | - | - | ||||||||||
| - Irrecoverable VAT | b | - | (6) | - | - | - | 6 | ||||||||||
| Ingenious Media Investments Limited | |||||||||||||||||
| - Arrangement fee | a | - | - | - | - | - | - | ||||||||||
Transactions Between Related Parties
Ingenious Capital Management Limited, a company which is a wholly-owned subsidiary of Ingenious Capital Management Holdings Limited, which is controlled by Patrick McKenna, has entered into consultancy agreements with each of the Company’s Investee Companies to provide management services from 6 April 2014. Ingenious Media Consulting Limited, which is a subsidiary of the Ingenious Media Holdings plc group of companies controlled by Patrick McKenna, provided management services under consultancy agreements until 5 April 2014.
During the period, Ingenious Capital Management Limited charged consulting fees for the provision of such services totalling £103,000 excluding VAT (31 December 2014: £122,000; 30 June 2014: £13,000), of which £29,000 remained outstanding as at 30 June 2015 (31 December 2014: £38,000; 30 June 2014: £16,000).
During the period, Ingenious Media Consulting Limited charged consulting fees for the provision of such services totalling £Nil (31 December 2014: £Nil; 30 June 2014: £94,000), of which £Nil remained outstanding as at 30 June 2015 (31 December 2014: £Nil; 30 June 2014; £58,000).
The Company’s statutory financial statements for the year ended 31 December 2014 have been delivered to the Registrar of Companies. The auditor’s report on those financial statements was unqualified and did not contain statements under Section 498 (2) or section 498 (3) of the Companies Act 2006.
This condensed interim information for the period does not constitute statutory financial statements within the meaning of s434 of the Companies Act 2006.
Copies of the half-yearly financial report are being sent, or made available electronically, to all shareholders. Further copies can be downloaded from the Company’s website: www.ingeniousvcts.co.uk
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